H&M promises to pay textile workers 'living wage' by 2018

H&M, the world's second-largest retailer, said Monday it plans to pay 850,000 textile workers a living wage by 2018. Above, an H&M store in Germany.

H&M, the world's second-largest retailer, said Monday it plans to pay 850,000 textile workers a living wage by 2018. Above, an H&M store in Germany. (Krisztian Bocsi/Bloomberg)

Ricardo LopezThis post has been corrected. See note below for details.

Swedish clothing retailer H&M on Monday said it is developing a plan to ensure about 850,000 textile workers earn a "living wage" by 2018.

Hennes & Mauritz, the world's second-largest clothing retailer, said it will begin its pay strategy with three factories -- two in Bangladesh and one in Cambodia -- by 2014. The plan involves improving its purchasing practices to ensure its suppliers pay workers the true cost of labor, the company said.

"It has always been our vision that all textile workers should be able to live on their wage," a statement by the company said. "We believe that the wage development, driven by for example governments in some countries, is taking too long, so we want to take further action and encourage the whole industry to follow."

Helena Helmersson, global head of sustainability at H&M, unveiled details of the plan at the first-ever Living Wage in International Supply Chains conference in Berlin on Monday.

The proposal did not specify what those wages would be but indicated the review process would help identify labor costs to pay workers accordingly.

By 2018, H&M said it plans to raise wages at 750 of its suppliers, which make 60% of the company's goods.

Most of the retailer's garments come from factories in Asia, including Bangladesh, where the collapse of a clothing factory killed 1,129 garment workers. It became the deadliest garment-factory accident and prompted calls for Western retailers to force suppliers to improve working conditions.

In the aftermath of the deadly factory collapse, H&M, the largest buyer of clothing made in Bangladesh, was the first company to sign a safety pact to improve factory conditions in that country, where garments account for about 80% of exports.

H&M's living wage plan urges Bangladesh and Cambodia's government to raise the minimum wage and revise it annually.

[For the record, 12:00 p.m. PST Nov. 25: An earlier version of this article incorrectly referred to H&M as a Swiss company. The company is based in Sweden.]